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Early Retirement of Coal Power Plants through Voluntary Carbon Credits? The case of ACEN in the Philippines

Author

Listed:
  • Christoff Scherrer

    (Kassel Institute for Sustainability & Global Labour University)

Abstract

This paper explores the possibility of using voluntary carbon credits to retire coal-fired power plants early. It introduces carbon emission trading using the example of the substantial European emissions trading market. It presents recommendations for phasing out coal power plants and discusses the challenges of calculating plant proprietors' losses and carbon emission savings. It also outlines the specific challenges of voluntary carbon credits and the need to monitor carbon credit deals. These issues are illustrated with the world’s first Energy Transition Mechanism transaction for the early retirement of a coal plant owned by ACEN in the Philippines: the South Luzon Thermal Energy Corporation (SLTEC). It analyzes the financial transactions carried out by the power plant owner and the envisaged use of voluntary carbon credits. The paper concludes that there are many obstacles to moving beyond a few pilot projects.

Suggested Citation

  • Christoff Scherrer, 2025. "Early Retirement of Coal Power Plants through Voluntary Carbon Credits? The case of ACEN in the Philippines," UP School of Economics Discussion Papers 202509, University of the Philippines School of Economics.
    • Handle: RePEc:phs:dpaper:202505
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    File URL: https://pre.econ.upd.edu.ph/upsedp/index.php/dp/article/view/1564
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    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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